EU corruption hurts recovery

BAD INFLUENCE:Corruption costs the EU 120 billion euros a year — money that could help reduce the deficits in the eurozone’s most financially troubled nations

Reuters, BRUSSELS

Political and business corruption in Europe, especially in the Mediterranean, could further weaken vulnerable economies struggling to overcome the euro crisis, an international watchdog said yesterday.

While it sees itself as one of the world’s least corrupt regions, few countries in Europe regulate lobbying or give citizens easy access to public information, allowing a culture of graft to take hold and political and business elites to divert funds, Transparency International said in a report.

Bloated budget deficits and debt are at the heart of the eurozone’s two-and-a-half-year-old crisis, and corruption means scarce public money is spent inefficiently and may be creamed off at a time when record unemployment is reducing government revenues.

“Countries with weak anti-corruption safeguards are often the ones with the most problems in their public debt at the moment,” said Finn Heinrich, research director at Transparency International, who supervised the report across 25 countries.

“Audit institutions are particularly weak and often not independent from the government, meaning that public officials probably know they can get away with cutting corners,” he said.

The report named Greece, Italy, Portugal and Spain — the eurozone’s most financially troubled nations — as having deeply rooted problems in their public administrations, namely that officials are not accountable for their actions.

Although not technically illegal behavior, politicians and business leaders use their influence to win contracts and sway policies, while parliaments often fail to enforce the anti-graft laws and rules that do exist, the report said.

“The links between corruption and the ongoing financial and fiscal crisis in these countries can no longer be ignored,” it said.

Corruption costs the EU about 120 billion euros (US$150 billion) a year, according to the Strasbourg-based Council of Europe. Many analysts say the figure is probably higher. Privatizations are fertile ground for creaming off funds into private hands and Transparency International said that Portuguese and Greek privatization programs could be at risk, leaving less money to pay down debt and deficits.

“Governments may not get as much money out of the privatizations as they should because a certain number of people close to private officials benefit rather than the public,” Heinrich said.

The perception that governments are too close to business elites added to the public anger that brought thousands of people onto the streets in Madrid and Athens in recent months. Former Italian prime minister Silvio Berlusconi was dogged by scandal. He faced a bribery case in Milan in February, although it was thrown out by the court.